Credit deflation and the reflation cycle to come (part 2)

[JMD]

58 minutes ago, Hardhat said:

I've always suspected there are quite a few more readers than posters. 

Of course, many are only here for the pizza recipes.

...or to short Yellow-Reduced-Sticker!, could be wrong but haven't seen much from YRS recently?

[Harley]

14 hours ago, Popuplights said:

Makes be happy to be 51.

I went in too early!  I could have waited a few years!  Happy to have them back but I think the cooling off period expired so here I am, old fart, small pension!

[Harley]

2 hours ago, Heart's Ease said:

Just a marker to say - this thread has now had just over a million views 🍻

Is that a real million?  Have to ask these days!

[Harley]

The one thing this thread lacks is a discussion about how to navigate the BK.  All very well to discuss the green fields on the other side but you first need to get there with you and your precious intact!  @Vendetta is providing a good service here in terms of reminding us how bad and fast it could be (and has started a new thread to explore).  For example, about how margin calls at such a time can severely impact (even if just for a shortish time) supposedly safe havens such as PMs.  The time to start planning in detail (and executing anything that needs doing like opening additional accounts) is now.  The imperative is to have pre-planned and tested things before it kicks off or you risk being bashed about and being at the mercy of emotion, circumstances, luck, etc.  We each need to draw a big red button and have a plan (including trigger points) to go with it.  For example, would you just go into cash?  Suppose that gets taken as part of a bail in or frozen until such time as the opportunities have gone, etc.  Anyone made any concrete plans ready to go come the possible BK?  For me, I've diversified in every way possible and have backed off funds/ETFs, etc to reduce the risk of them halting withdrawals.   

[janch]

5 hours ago, Democorruptcy said:

Report here about oil demand, it's only by a "think tank"!

 

As well as reduce/reuse/recycle plastic there is scope to "harvest" the plastic already in existence and reverse the process so extracting oil.  @Majorpain linked to an article about producing hydrogen from plastic a few pages back.  At the moment all the plastic cluttering up the oceans etc is a "free"resource to be used.

If anyone manages to make this profitable it would reduce the need for "new" oil.  This would obviously affect the oil price..........just a thought to throw into the mix.

[wherebee]

1 hour ago, Harley said:

The one thing this thread lacks is a discussion about how to navigate the BK.  All very well to discuss the green fields on the other side but you first need to get there with you and your precious intact!  @Vendetta is providing a good service here in terms of reminding us how bad and fast it could be (and has started a new thread to explore).  For example, about how margin calls at such a time can severely impact (even if just for a shortish time) supposedly safe havens such as PMs.  The time to start planning in detail (and executing anything that needs doing like opening additional accounts) is now.  The imperative is to have pre-planned and tested things before it kicks off or you risk being bashed about and being at the mercy of emotion, circumstances, luck, etc.  We each need to draw a big red button and have a plan (including trigger points) to go with it.  For example, would you just go into cash?  Suppose that gets taken as part of a bail in or frozen until such time as the opportunities have gone, etc.  Anyone made any concrete plans ready to go come the possible BK?  For me, I've diversified in every way possible and have backed off funds/ETFs, etc to reduce the risk of them halting withdrawals.   

I think fund freezes and account freezes are pretty much baked in.  The only hope you can have is that the firm you have your investment with doesn't do an MF Global where people who had invested well saw gains lost as what money was left was shared amongst investors.  That means, for me, avoiding the smaller players especially those lead by high profile alpha males.  It also means taking pretty frequent screenshots of positions - as a firm goes down, records can be lost/deleted.  I also have avoided funds as I think most are following, not leading, at the retail investor level, and whats the point of paying for that and risking a freeze?  I have one ETF now - GDXJ - just due to the sector.

You might see bail ins of cash balances in banks in some countries.  Possible in Australia, I think.  So - I have what little money we have spread across 3 banks as the gvt will probably do a 'everyone over X loses a%' type approach.  

It's coming.

[JMD]

On 22/08/2020 at 09:38, MvR said:

One for the telecoms watchlist maybe..  Ciena ( Ticker CIEN ).  They're in optical networks, high speed switches etc. Some discussion here :- ( starts 12:10 ish ).  Decent earnings growth apparently, and they could be well positioned to benefit from the switch away from Huawei..

They also talk about their general market view which is still bullish, mostly for political reason.. stimulus, election year etc. 

 

I notice that CIEN has dropped approx. 50% in last week - anyone know why?                         

 I believe Leonardratso might own some?

[leonardratso]

looks like an overreaction to be honest, plus getting caught up in the nasdaq selloff, i bought a chunk more ciena yesterday after it tanked, but i ditched most of it today, just a small amount left, bit the bullet.

It was somwhat offset with my QQQS which is up 12%.

just cut my loses there, wont be going back.

The comments here point to generally negative outlook;

https://seekingalpha.com/news/3611374-ciena-beats-fq3-estimates-warns-of-continuing-pandemic-pressure-sharesminus-8

even though it had a good report for last quarter.

I cant blame the IOT guy, on the surface it looks ok, obviously its being treated like junk, so im well out of it, left a small amount in and forget about it.

[leonardratso]

this is probably what the BK will look like to a degree, so maybe check out whats dying at the moment and avoid eh.

actually just sold the last bit - fickle, and swapped the cash into s&p 500 short

 

[JMD]

16 minutes ago, leonardratso said:

looks like an overreaction to be honest, plus getting caught up in the nasdaq selloff, i bought a chunk more ciena yesterday after it tanked, but i ditched most of it today, just a small amount left, bit the bullet.

It was somwhat offset with my QQQS which is up 12%.

just cut my loses there, wont be going back.

The comments here point to generally negative outlook;

https://seekingalpha.com/news/3611374-ciena-beats-fq3-estimates-warns-of-continuing-pandemic-pressure-sharesminus-8

even though it had a good report for last quarter.

I cant blame the IOT guy, on the surface it looks ok, obviously its being treated like junk, so im well out of it, left a small amount in and forget about it.

Thanks Leonardratso. Yes, probably over-reaction/nasdaq sell-off, or maybe heading towards its 'fair-value' along with many tech stocks?

[wherebee]

45 minutes ago, leonardratso said:

this is probably what the BK will look like to a degree, so maybe check out whats dying at the moment and avoid eh.

actually just sold the last bit - fickle, and swapped the cash into s&p 500 short

 

Sea of red for me but only very very small drops across all investments, which I think is good.  MOS up.

I'm sitting on the sidelines with cash now.  If there was a 10%+ drop in the stocks I already have, I'd be in.

[MvR]

1 hour ago, JMD said:

I notice that CIEN has dropped approx. 50% in last week - anyone know why?                         

 I believe Leonardratso might own some?

Earnings beat but low guidance apparently..  https://www.fool.com/investing/2020/09/03/why-ciena-stock-just-crashed-23-and-took-infinera/

A nervous market, plus it's pretty thinly held stock, so liable to drop hard in a panic I guess.  Ouch.

 

[MvR]

Just a trader's observation and definitely NOT an investment call.. but this pull-back has seen the S&P500 perfectly kiss the blue Kijun-Sen on my 18-52-104 Ichimoko chart.  This chart from IG's spreadbetting data, which copies /ES.. the S&P e-mini contract which is the most liquid, and probably the most relevant instrument to watch TA-wise.

This move could just be a re-test of the pre-covid all time high, which we are now back above as I write this.  If we do carry on falling, a rapid drop to the top of the cloud around 3100 could be possible without breaking the melt-up to 4500 thesis. 

[JREWING]

My partner has just gone to self investment on her Q Super....

Not a huge pot circa €37k 

Been looking at the oilies and gold miners down under listed on the ASX.

Anybody holding any stocks listed on the ASX.

Anything I should be looking at. Good value and a good potential uplift.

 

[Don Coglione]

39 minutes ago, Panda said:

My partner has just gone to self investment on her Q Super....

Not a huge pot circa €37k 

Been looking at the oilies and gold miners down under listed on the ASX.

Anybody holding any stocks listed on the ASX.

Anything I should be looking at. Good value and a good potential uplift.

 

I have long fancied Telstra, but never jumped in (being in the UK, it would have meant buying a US ADR).

Australia has a greater tolerance of monopolies.

Short the Big 4 banks!

[Democorruptcy]

1 hour ago, Cattle Prod said:

Thanks D, this is good stuff to challenge views on the demand side.

That report said

Quote

demand for virgin plastics may peak in 2027, as its growth slows from 4% a year to 1%

How can something have peaked if it is still increasing? It's only peaked when it's starts falling.

[JREWING]

11 minutes ago, Knickerless Turgid said:

I have long fancied Telstra, but never jumped in (being in the UK, it would have meant buying a US ADR).

Australia has a greater tolerance of monopolies.

Short the Big 4 banks!

Don't fancy Telstra. I have a Telstra account. Just been notified that they are abolishing international roaming on all Pre Paid mobile accounts as of 13th Oct.

If the rumours that Telstra will hive off the infrastructure into a new business and Telstra will remain a reseller and the suggestion is the infrastructure part is already more valuable than the sum of the parts I can see Telstra reseller disappearing.

[Lightscribe]

2 hours ago, MvR said:

Just a trader's observation and definitely NOT an investment call.. but this pull-back has seen the S&P500 perfectly kiss the blue Kijun-Sen on my 18-52-104 Ichimoko chart.  This chart from IG's spreadbetting data, which copies /ES.. the S&P e-mini contract which is the most liquid, and probably the most relevant instrument to watch TA-wise.

This move could just be a re-test of the pre-covid all time high, which we are now back above as I write this.  If we do carry on falling, a rapid drop to the top of the cloud around 3100 could be possible without breaking the melt-up to 4500 thesis. 

Nice, as that collaborates with my thinking as slightly further drop off the 99 MACD one day chart of BTC. If it does happen, alts like LINK (and SXP) will fall a bit further even though they are on coiled springs for a rebound after the BTC sell off and following the SP500 drop then rebounding towards a temporary ATH. US indexes longer term down however, BTC will sell off too as well as PMs and miners, just have to judge when to tether in crypto. 

[Transistor Man]

4 hours ago, JMD said:

Thanks Leonardratso. Yes, probably over-reaction/nasdaq sell-off, or maybe heading towards its 'fair-value' along with many tech stocks?

I have no special knowledge of investing in telecoms equipment companies, but from what i’ve seen over the years, it always seems very unpredictable.

All the 100G datacentre equipment is getting upgraded to 400 Gbps, then will go to 800Gps. Plus the 5G, and broadband upgrades, so I would guess the big players would do well.

I went to a photonic IC conference 18 months ago. From what I saw, 

Infinera has got a unique technology for network switching: an indium phosphide single chip solution, with integrated lasers. 

Whereas, I think Ciena are going for a silicon photonics solution. 

Both great from a technical perspective, but no idea about investing in this area. 

 

 

[Popuplights]

5 hours ago, wherebee said:

Sea of red for me but only very very small drops across all investments, which I think is good.  MOS up.

I'm sitting on the sidelines with cash now.  If there was a 10%+ drop in the stocks I already have, I'd be in.

I topsliced MOS

[wherebee]

6 hours ago, Panda said:

My partner has just gone to self investment on her Q Super....

Not a huge pot circa €37k 

Been looking at the oilies and gold miners down under listed on the ASX.

Anybody holding any stocks listed on the ASX.

Anything I should be looking at. Good value and a good potential uplift.

 

I think Australia is going to have a really shitty two to five years economically unless the government starts a massive program of infrastructure building/war materiel building (they have already started some of the latter).

Basically I see every ozzie company which has boomed over the past 25 years as fucked.  The management just do not understand how lucky Oz has been, and how protected they have been from reality.  I only have two aussie based investments in mining, and one in energy, everything else I suspect is overvalued.  I don't do shorts etc etc (not smart enough) otherwise I'd be looking at a range of players who I think will crash hard.

[Lightscribe]

5 hours ago, wherebee said:

I think Australia is going to have a really shitty two to five years economically unless the government starts a massive program of infrastructure building/war materiel building (they have already started some of the latter).

Basically I see every ozzie company which has boomed over the past 25 years as fucked.  The management just do not understand how lucky Oz has been, and how protected they have been from reality.  I only have two aussie based investments in mining, and one in energy, everything else I suspect is overvalued.  I don't do shorts etc etc (not smart enough) otherwise I'd be looking at a range of players who I think will crash hard.

Some of my best friends live in Australia and NZ (as well as family - I lived in both for a while) having emigrated there years back. I’ve been trying to sort out an investment strategy for my friend in NZ.

Bar the national kiwisaver, options are severely limited without opening up an account with Interactive Brokers and the fees are quite steep so it limits to investing a wedge each time.

Problem is the Australian economy is absolutely  hinged on the property market (and we thought it was bad here) massive amounts of debt and over speculation.

Once the crash happens, the impact in Australia will be huge. Even though NZ has property speculation of its own with Asian buyers, the wider economy devastation will effect both countries.

[MrXxxx]

Had `skin in the game` for six months now and looking at my extensive portfolio [12 stocks :-) ] only one of them has stayed consistently in the green (& +10%), and paid dividends...any ideas?.....one of the FAANGS? (No chance!)...that dirty old dog that is BATS....so much for being `last years` stock.

[sancho panza]

On 03/09/2020 at 14:47, Democorruptcy said:

In the link I posted it says 1%

It's just Wales so far but with cross party support I thought it was worth mentioning, after you said stepping in on the LL's side would be politically untenable.

fair play DM,I haven't seen the detail as yet and we'll see what the uptake is.My hunch is,especially given how long evictions are taking-is that it'll be low.

Looks like they'll be funding the scheme through credit unions which seems rather strange.

On 03/09/2020 at 16:35, JMD said:

... Wealth, like energy, cannot be destroyed, only transferred. Energy is a fundamental building block of the universe, and wealth is a fundamental building block of society.   

I find the subject interesting?! But I shan't bang on. If the following quote intrigues you, you might like to use the below link to read more (copy it into browser). 

'Wealth is that which mediates what is valuable now to what is anticipated as valuable in the future...'

https://www.tandfonline.com/doi/full/10.1080/02757206.2018.1460600?scroll=top&needAccess=true

 

In my view there are two sorts of money.1) base money-cash,reserves at central bank 2) credit moeny

Base money gets destroyed by CB's as per @DurhamBorn previous steatement.Credit moeny gets stored in assets and those assets see huge swings in value.

As per previous example of 10 hosues on an estate all bought for £100,000.Marginal hosue sells for £200,000,then technically, £1 million of credit moeny has been created.vice versa too.

[sancho panza]

On 03/09/2020 at 17:53, DurhamBorn said:

Yes the S+P is at Davids old target now.Im never one for shorting as i never ever use margin.The markets are so unbalanced now i dont see any worth is top out figures on indexes,though they will be huge on sentiment of course as most people are now in passives that mostly track the index.

I'm presuming this call by David is based ona a further weakening dollar?Has he made any calls on that lately?

I ask out of self interest natch:-)

On 03/09/2020 at 17:47, Cattle Prod said:

That's very compelling and clear, thanks Sancho. It's interesting that the oil price didn't peak till 2-6 months into all three recessions, and that oil bottoms were c.18 months before start of recession. 

Low oil prices are a direct stimulus to the economy, as it is woven through every part of it. I fancy that the oil bottoms give the final push to economies and stock markets till even that stimulus is used up and they roll over, with oil charging on a while longer till demand loss becomes evident.

Of course we have Fed stimulus on top nowadays too, so it's all supercharged. The difference between $20 oil and $100 oil is a $240bn a month stimulus to the world economy.  Doesn't seem like much compared to Fed numbers, but it's very much direct to the real economy, and I think has real effects. Under non pandemic circumstances it hugely stimulates demand (bust to boom). It'll be really interesting to see what happens once these nonsensical restrictions are gone.

At sustained high oil prices, like from 2011-2014 you are transferring ~ $2-3 trillion a year out of productive economies into moribund oil producing countries who are increasingly hoarding it (and a small slice to our favourite oil companies of course). I suspect that may be what finally breaks the system toward the end of the decade (could be a $5 Tn a year transfer at that point), especially if the Fed can't print due to inflation. The world cannot afford expensive oil, and yet I can't see where the supply is going to come from to make it cheap again. There will also be a run on dollars to pay for the oil, but Luke Gromen tells that idea better than I.

I was surprised by the correlation.Obviously the stock market moves either side of the recessions(GDP calcualtions are opaque at atimes) but the relationship has been plain to see for the last 3 .....as you say,intriguing that it runs up and then peaks mid recession..

this is the classic leads and lags DB talks about isn't it?

as you say the real difference here is that it goes into peoples pockets and the real economy unlike the hotchpotch of CB interventions which grease the wheels in the square mile.

on that latter point in bold,it's becoming increasingly obvious to those of us late to the party that this is the case.The art berman article you quoted says it as does the Tim Morgan-surplus enrgy blog.